All of the Angels I have been associated with since 1996 when I started the Gathering of Angels in Santa Fe NM, always ask and are most concerned about Exit strategy….how they get their money back. They want both the return of their money in reasonable time period like 2-4 years and a return on their capital for taking the risk to invest. They are not getting a reasonable return on their money today with inordinately low cd, treasury notes and bills and money market fund. Angels are on the prowl for returns of 8-15% with moderate risk and even higher with high risk investments. 25-40% expected ROIs are common for investments in seed and early stage companies.
At a recent Atlanta Gathering of Angels, one of our presenters came before our GOA practice session and suggested he was looking for $100,000 and was offering a 3% coupon for 12-18 months note to provide capital for his business….GOA staff suggested that this was unacceptable and when he finally presented to the Angels later in the night, he offered 10% and was told that even this was not appealing to an Angel investor…Angels want and demand more for taking the risk. Most Angels want an equity kicker and direct investment in the venture. Some will accept and invest in a convertible note with an equity kicker. GOA offers sage advice and wise counsel to all paid presenters to make their offering to the assembled Angel group more appealing.